Edelsten loses control of company

Chris Vedelago and Mark Hawthorne

Geoffrey Edelsten's business empire is in financial trouble again, with the flamboyant entrepreneur and disgraced doctor losing control of one of his companies after failing to pay more than $256,000 in taxes.

The run-in with tax authorities comes as Mr Edelsten apparently continues to flout corporate regulations requiring the disclosure of the financial records for his charity Great Expectations Foundation, which solicited donations from celebrity guests at his 2009 gala wedding to fitness instructor Brynne Gordon.

In the latest stoush, Victoria's State Revenue Office won its bid to have the company Chakate Pty Ltd declared insolvent in May after it failed to hand over more than $250,000 in unpaid payroll taxes, penalties and interest.

Liquidator Pitcher Partners has since found Chakate has no assets and collapsed as a result of ''poor financial control, including [a] lack of records'' and ''poor strategic management'' by Mr Edelsten, the company's sole director, secretary and shareholder.

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Preliminary investigations show Chakate owes at least $264,296 to creditors, according to documents filed with ASIC.

Webb Korfiatis, Mr Edelsten's legal representative, said Chakate had no employees and held no cash at any time, claiming its financial records are therefore ''fairly bland'' and the first report by the liquidator was completed ''quickly and without much information''.

It's sole purpose was to hold shares in other companies and the SRO's demand was for payroll taxes incurred by other entities, it said.

Earlier this year, Mr Edelsten also narrowly avoided losing control over two other companies over unpaid state payroll taxes totalling $33,460. Insolvency orders sought by the SRO in the Supreme Court were dropped after the bills were paid. These bills may comprise some of the $256,000 now being sought.

At the time, Mr Edelsten denied owing any money to the SRO. ''At the time of the reported comment by Geoffrey Edelsten, the belief was that all tax was paid,'' the firm now says.

On Friday, Webb Korfiatis also issued the first public response on behalf of Mr Edelsten to questions raised about the operation of his charity Great Expectations Foundation by a Fairfax Media investigation in May.

The foundation was established in 2009 ahead of Brynne and Geoffrey's lavish nuptials at Crown to ensure that donations solicited in lieu of gifts from celebrity guests would be tax deductible. Jeanne Pratt and son Anthony were among those who donated. Since the wedding, Great Expectations continued to solicit donations through Mr Edelsten's website, Australia's Worst Journalist, which he uses to criticise media coverage of his business and personal affairs.

Fairfax Media had revealed that some of the foundation's nominated charities either never received any money or were unaware their names had been used to solicit funds, including the Royal Children's Hospital, beyondblue, Lighthouse Foundation and Australian Sports Foundation.

Great Expectations has also never filed an annual financial report in spite of ASIC disclosure requirements, the terms of the foundation's constitution and a promise by Mr Edelsten that the accounts would be made public.

Instead, a day after the expose, representatives of Great Expectations filed an application with ASIC to convert the foundation from a public non-profit company to a private proprietary company limited by shares, eliminating the need to file an annual report.

But Webb Korfiatis maintains the board of Great Expectations had already decided to end the charitable functions of the foundation and convert it to a private company for future use as a corporate entity because it was ''cost effective''.

The firm also said there was ''a view'' that the foundation did not have to file annual reports.

Mr Edelsten and Webb Korfiatis have refused requests to provide its financial records.